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ADB, JICA extend Aug 31 deadline

Thu, Aug 30th, 2012 4:06 pm BdST

Dhaka, Aug 30 (bdnews24.com) — Co-financiers of the Padma bridge project, the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA), have extended the effectuation date of their promised loans by a month.

Sources close to the government told bdnews24.com that a request for extension met with approval at a meeting on Thursday with representatives of both the agencies.

A formal letter on the term extension was handed over to ADB Country Director Theresa Kho when she went to the Economic Relations Division (ERD) office at around 3pm.

She then nodded her agency's approval to the extension.

After that a similar letter was given to a JICA representative who turned up later at the ERD office.

Of the estimated $2.9 billion project cost, the ADB has agreed to provide over $610 million and the JICA has pledged $400 million.

The two co-financiers had extended the deadline previously on July 31, setting it for Aug 31, after the key fund-provider of the project, World Bank, stepped back raising corruption allegations against Bangladeshi government officials on June 29.

Earlier the day, Director General of South Asia Department of the Asian Development Bank (ADB) Juan Miranda reasserted the bank's stance as a co-financer in the project and assured of continued support.

"Let me repeat that words that I want in your headline – this bridge will be built," Miranda, on a two-day official trip to Dhaka, told journalists following a meeting with Finance Minister Abul Maal Abdul Muhith.

Responding to a query, he said: "ADB is as of today and as of tomorrow, ADB is a co-financier in this project."

To another query whether the ADB would extend the loan effectuation date, he again said, "This bridge will be built."

The genesis and beyond

The Padma bridge project has been in the throes of uncertainty ever since the lead financier, World Bank, cancelled its loan agreement of $1.2 billion for the mega project on June 29 saying it had "credible evidence" of a high-level corruption conspiracy among Bangladeshi government officials.

On July 31, the ADB and the Japan International Cooperation Agency (JICA), who were to provide major chunks of the remaining funds needed for the $2.9 billion project, extended their loan effectuation deadline to Aug 31.

The Asian lender has pledged to provide $610 million, while the JICA would contribute $400 million to the project, and the Jeddah-based Islamic Development Bank is committed to another $140 million.

Ever since the World bank pulled itself out of the project, the government has been stating that the bridge would be built with own funds, if need be, but the Finance Minister has been trying to persuade the World Bank to return.

On Aug 28, Muhith reiterated his hopes about the global lender getting on board again to finance the ambitious project. "Still, I have time until Aug 31. Don't get frustrated. So far nothing has happened to get frustrated."

Muhith made the observation as newspapers in the last two days had reported that the lending agency would not release the promised fund since all the conditions it had laid down were not fulfilled. It was rumoured that Prime Minister's Economic Affairs Advisor Mashiur Rahman is going to resign as per the bank's demand, but no such evidence is available to date.

After the Washington-based agency raised allegations of corruption last year, it gave the government some conditions for checking corruption in the project. As those remained unmet, it pulled out of Bangladesh's largest infrastructure project.

In the wake of controversy over the allegation of corruption, former Communications Minister Syed Abul Hossain resigned in July last year and former Bridges Division Secretary Mosharraf Hossain was sent on leave.